A research paper on inadequacies of institutional agricultural creditsystem in coimbatore district

The institutional credit has been conceived to play an essential part in the agricultural development of India. A large number of institutional agencies are involved in the disbursement of credit to agriculture. In spite of various measures to rejuvenate farm credit, the flow of credit to agriculture sector remained inadequate quantitatively and qualitatively. In this backdrop, the present study has examined the inadequacies of institutional agricultural credit system and has identified the determinants of increased use of institutional credit at the farm household level in Coimbatore. The study is based on a random sample of 130 farm households covering 4 blocks in Coimbatore, comprising 26 marginal, 26 small, 26 semi-mediums, 26 medium and 26 large farmers and pertains to the year 2012-13. The quantum of institutional credit availed by the farming households is affected by a number of socio-demographic factors which include education, farm size, family size, gender, occupation of household, etc. The total debt per sample farm household from both institutional and non-institutional sources has been found to be Rs 22, 66,369 in the year 2012-13. The institutional sources have contributed about 92 per cent to the total debt and non-institutional 8 per cent. Although the institutional credit has increased rapidly in recent years in Coimbatore, it still lacks behind the productive needs of the farmers in Coimbatore. In the case of term loans, extent of credit gap was estimated to be 9 per cent in the study area. About 60 per cent farmers have reported the procedure to get loans from the institutional agencies to be complicated and time-consuming. Policy implications include simplification of loan application form and maintenance of proper records of loan applications and making disbursement of loan mandatory.